Cadence Bank CADE closed the sale of its insurance business, Cadence Insurance, Inc., to Arthur J. Gallagher & Co. AJG in a cash deal worth $904 million. The amount is subjected to certain customary purchase price adjustments.
The deal was announced on Oct 24, 2023, and was expected to have a positive impact on CADE’s earnings per share. The company projected that the transaction would result in an immediate net capital increase of approximately $620 million and net cash proceeds would amount to around $650 million. Both estimations are made on an after-tax basis.
Cadence intends to channelize sale proceeds to repay its wholesale borrowings as well as invest in its core banking business. The significant capital creation would also provide sufficient flexibility to undertake capital distributions, thereby enhancing shareholders’ value. Hence, the transaction enables the company to grow its core banking business and strategically positions it for long-term growth.
At the time of deal announcement, the transaction was expected to provide an accretion of approximately 24% to CADE’s tangible book value per share and improve common equity tier 1 ratio by around 160 basis points.
Cadence Insurance has been successfully managing 30 offices in eight states across the Southeast. These along with transfer of executive leadership, management and employees will also be included in the deal.
CADE shares have gained 27.1% over the past six months compared with AJG’s rise of 21.1%.
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CADE presently carries a Zacks Rank #3 (Hold) and AJG has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Expansion Effort by a Bank
LCNB Corp. LCNB, the holding company for LCNB National Bank, signed a definitive agreement to acquire Eagle Financial Bancorp, Inc. in a stock-and-cash transaction. The closing of the deal, subject to the approval of EFBI shareholders and regulators, and other customary conditions, is expected in the second quarter of 2024. The approval of LCNB shareholders is not required.
Eagle Financial, the holding company for EAGLE.bank, is a full-service banking institution with three offices in Cincinnati, OH. As of Sep 30, 2023, it had $175.8 million in assets, $140.8 million in loans, $135 million in deposits and $26.3 million in consolidated stockholders’ equity.
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